It could have been worse: what the Budget really means for business ownersThe hidden tax trap catching long-term UK residents off-guardInheritance tax is shifting again – and you can’t afford to ignore itAre bright days still ahead for Britain’s rural businesses?Second homes council tax premium plan gets mixed reception

A plan to tackle the affordable housing crisis in North Yorkshire by doubling the council tax charge on second homes has received a mixed reception.

North Yorkshire County Council has said the proposal to introduce a 100% council tax premium on all second homes in the county from April 2024 will depend on the government passing legislation in the coming months.

The move would double an average band D council tax charge for second home owners to more than £4,100 in some of the most heavily affected areas of the county.

Announcing the proposal, the authority stated it had potential to generate an annual £14m windfall to fund services and affordable housing schemes, funding for which the North Yorkshire Rural Commission identified as a significant challenge. About £1.5m would come from the Harrogate district.

Upper Dales councillor Yvonne Peacock, whose drive to introduce a council tax premium on second homes was rejected by Richmondshire District Council four years ago, said she was “absolutely delighted” by the county council’s proposal.

She said the premium would bring some rarely used second homes on to the market as “people don’t like paying over the odds for anything”, while the funding it would generate would overcome one of the biggest obstacles to building affordable houses.

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About half of the “windfall” would come from properties in Scarborough district, especially along the coast, and a further large proportion from Richmondshire, which the county council has stated would be shared with all precepting authorities, such as police, rather than ploughed directly back into the most affected areas.

A report to a meeting of the council’s executive, which is considering the proposal on Tuesday, warns that numerous concerns have been raised whether the second homes premium might encourage council tax premium avoidance, with owners transferring properties to holiday lets to qualify for discounted business rates.

Devaluing fears

The proposal has been met with open hostility by some who say it has potential to flood the housing market with properties, devaluing homes and undermining the viability of businesses which depend on second home owners.

County council Independent group leader Councillor Stuart Parsons described the move as “one of the stupidest suggestions the Tories have ever come up with”, adding it would cause more damage than good as there would be “so many loopholes people could dodge out of paying the premium as they wish”.

Restricting the premium to second homes rather than holiday lets would simply lead to the creation of “a multitude of small companies”, he added, to which owners would pay a small nominal fee to themselves to stay at their properties.

Cllr Parsons predicted the authority would see a net loss in council tax as a result and that a levy limited to 100 per cent more council tax would be “pass vaguely unnoticed” by many second homeowners.

Other local politicians have claimed some areas of the county are suffering more due to holiday lets than second homes.

Nevertheless, Councillor John Amsden, chairman of planning in Richmondshire district, said while he welcomed action, the proposed premium would be “a non-starter unless you can pin a property’s ownership down”.

He said:

“It is a step in the right direction, but the problem is now local people cannot afford many of the properties due to a rise in demand, particularly in areas with good broadband connections, after the pandemic.

“Why should we have to suffer depopulation, see our infrastructure like schools and roads dwindle and watch hospitality industry struggle to find staff due to people wanting a second home?”

Harrogate BID ‘waste of money’, says pub landlord

A Harrogate pub landlord has described the town’s Business Improvement District as a “waste of money” — and is refusing to pay the £370-a-year levy.

Marik Scatchard has been the landlord of Christies Bar on King’s Road for 14 years. He told the Stray Ferret that his pub has seen little benefit from the BID, which was set up in 2019 to improve Harrogate town centre

Businesses within Harrogate’s town centre pay the BID 1.5% of their rateable value a year on top of their usual business rates. Harrogate BID brings in around £500,000 from local firms.

Because a majority of companies voted to set up the BID, Christies is legally obliged to pay the levy. However, Mr Scatchard said he would not pay because the BID does not offer good value for money to levy payers and is run by a “private mates’ club”.

He said:

“We’re having to pay these levies but all they seem to do is put stickers in shop windows. I’m not paying. They can lock me up.”

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Whilst the landlord said the BID provided the pub with some furniture after lockdown and sponsored the Pubwatch scheme, he dismissed recent BID initiatives such as a ping pong table in the Victoria Shopping Centre.

He said the BID should focus its efforts on cleaning up King’s Road and Parliament Street, which he said were regularly strewn with litter.

BIDs have been criticised for doing jobs that have traditionally been under the remit of local councils, effectively taxing businesses twice.

Mr Scatchard said:

“Hardly anyone is in the ping pong room when I’ve been past. It’s a joke. It won’t bring anything to town.

“You don’t see them doing anything around the King’s Road area. It just winds me up, it doesn’t benefit me at all.”

BID’s response

Matthew Chapman, Harrogate BID Manager, said:

“We are well aware of Mr Scatchard’s views on the BID and the levy. Whilst he hasn’t paid his levy for the last two years, he has been happy to accept support from us, in particular outdoor furniture to help him out of the first lockdown in July 2020. He also had BID-funded flower boxes surrounding his venue.

“Christies also benefits from our sponsorship of Harrogate Pubwatch, and if he so chose to, he could take advantage of the LoyalFree app to help promote his business, and also become a member of the Harrogate Gift Card Scheme.

“He could also apply for a £750 match-funded grant, which would more than pay for one year’s levy! And whilst happy to criticise us on social media, he isn’t keen to speak with us in person, which we have tried to do on several occasions.

“Even though he personally doesn’t like the ping pong parlour, which I’m delighted to say is reopening at the end of the month, there are many who do, and these people make special trips into town to make use of this BID-funded activity.

“Finally, perhaps he’d like to pass comment on our recent festive partnership with Harrogate Borough Council and Destination Harrogate? Without BID and the levy, much of this would simply have not been possible.”